IMHO the real-estate bubble is of astronomical proportions. There have not only been cranes everywhere for the past 7 years or so, but the prices of housing have climbed and climbed much faster than wages. College grads can hardly afford to live in the cities they work in, and wealthy folk often own several apartments, but don't rent them all. Driving in Shanghai, you can see a lot of dark apartments at night. I was in Beihai, and toured an apartment site that was basically being built in a field. Many new complexes have very low occupancy rates. I've had a sense that this was building for a while, however, there are three things that I found different this time: 1) People were complaining about it. Friends and taxi drivers were complaining about the outrageous cost of housing and other goods. 2) There were phone numbers everywhere in windows and on walls like graffitti advertising to sell new apartments. Tons of phone numbers everwhere. 3) There is a very large number of outfits, little store fronts that are filled with a handful of people, some blueprints, and computers. They all sell property, much of which that has not been completed. There were tons of these little shops. I didn't see nearly so many of these a couple of years before. My hypothesis is that local governments keep lending for building because they get kickbacks, and because the construction increases GDP. Of course, they haven't done this by borrowing, but by speculation. When China moves, they all move. It's just a way things go there. That said, I don't understand China enough to think I can call the timing on this correction, or even know what it will look like. (I am guessing that the one-party system won't survive). I do know that what goes up must come down, and real estate in China has climbed sky high. I won't short China, but there is no way that I would invest there either.